Companies: 11,396     total market cap: NZ$263.978 T
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Materion
MTRN
#3603
Rank
NZ$6.99 B
Marketcap
๐Ÿ‡บ๐Ÿ‡ธ United States
Country
NZ$335.48
Share price
4.87%
Change (1 day)
62.62%
Change (1 year)
  1. Materion
  2. Quarterly Reports (10-Q)
  3. Financial Year FY2026 Q3

Materion - 10-Q quarterly report FY2026 Q3


Text size:
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 
____________________________________________ 
FORM 10-Q
(Mark One)
 
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 2, 2026
OR
 
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from             to             
Commission file number 001-15885
MATERION CORPORATION
(Exact name of Registrant as specified in charter)
Ohio34-1919973
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
6070 Parkland Blvd., Mayfield Heights, Ohio 44124
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code:
(216)-486-4200

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, no par valueMTRNNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes þ       No  ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes  þ        No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer þ Accelerated filer  ¨
Non-accelerated filer  ¨ Smaller reporting company ☐
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨    
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐     No  þ
Number of Shares of Common Stock, without par value, outstanding at October 2, 2026: 20,860,517.


PART 1 - FINANCIAL INFORMATION

Item 1. Financial Statements

Materion Corporation and Subsidiaries
Consolidated Statements of Income
(Unaudited)

Third Quarter EndedNine Months Ended
(Thousands, except per share amounts)October 2, 2026September 26, 2025October 2, 2026September 26, 2025
Net sales$567,290 $444,808 $1,731,021 $1,296,796 
Cost of sales463,589 358,685 1,441,142 1,051,836 
Gross margin103,701 86,123 289,879 244,960 
Selling, general, and administrative expense42,525 38,256 121,047 108,740 
Research and development expense6,505 6,548 19,224 19,466 
Restructuring expense 92 212 2,711 2,729 
Other—net4,172 6,164 16,605 15,068 
Operating profit 50,407 34,943 130,292 98,957 
Other non-operating (income)—net(370)(711)(997)(1,944)
Interest expense—net6,605 7,544 21,709 22,691 
Income before income taxes44,172 28,110 109,580 78,210 
Income tax expense 5,840 2,698 13,116 9,960 
Net income $38,332 $25,412 $96,464 $68,250 
Basic earnings per share:
Net income per share of common stock$1.84 $1.23 $4.64 $3.29 
Diluted earnings per share:
Net income per share of common stock$1.81 $1.22 $4.57 $3.27 
Weighted-average number of shares of common stock outstanding:
Basic20,848 20,731 20,810 20,763 
Diluted21,163 20,883 21,116 20,893 













See notes to these consolidated financial statements.


2

Materion Corporation and Subsidiaries
Consolidated Statements of Comprehensive Income
(Unaudited)
 
Third Quarter EndedNine Months Ended
October 2,September 26,October 2,September 26,
(Thousands)2026202520262025
Net income $38,332 $25,412 $96,464 $68,250 
Other comprehensive income (loss):
Foreign currency translation adjustment(2,155)(903)(4,537)9,308 
Derivative and hedging activity, net of tax399 (435)287 (2,414)
Pension and post-employment benefit adjustment, net of tax150 (161)377 893 
Other comprehensive income (loss)(1,606)(1,499)(3,873)7,787 
Comprehensive income$36,726 $23,913 $92,591 $76,037 





































See notes to these consolidated financial statements.


3

Materion Corporation and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
October 2,December 31,
(Thousands)20262025
Assets
Current assets
Cash and cash equivalents$15,404 $13,681 
Accounts receivable, net268,815 222,916 
Inventories, net485,943 461,231 
Prepaid and other current assets88,911 91,692 
Total current assets859,073 789,520 
Deferred income taxes9,640 7,727 
Property, plant, and equipment1,411,039 1,376,703 
Less allowances for depreciation, depletion, and amortization(870,251)(841,245)
Property, plant, and equipment, net540,788 535,458 
Operating lease, right-of-use assets62,286 62,036 
Intangible assets, net96,887 105,874 
Other assets24,900 21,529 
Goodwill279,824 280,657 
Total Assets$1,873,398 $1,802,801 
Liabilities and Shareholders’ Equity
Current liabilities
Short-term debt$19,609 $22,445 
Accounts payable189,139 148,642 
Salaries and wages30,701 19,312 
Other liabilities and accrued items53,914 45,445 
Income taxes809 5,054 
Unearned revenue11,967 12,685 
Total current liabilities306,139 253,583 
Other long-term liabilities13,240 12,556 
Operating lease liabilities61,882 60,568 
Finance lease liabilities12,308 13,384 
Retirement and post-employment benefits22,609 23,931 
Unearned income47,766 55,862 
Long-term income taxes544 532 
Deferred income taxes2,150 2,760 
Long-term debt377,440 436,348 
Shareholders’ equity
Serial preferred stock (no par value; 5,000 authorized shares, none issued)
— — 
Common stock (no par value; 60,000 authorized shares, issued shares of 27,148 at both October 2nd and December 31st)
393,918 351,901 
Retained earnings999,726 912,361 
Common stock in treasury(315,418)(277,473)
Accumulated other comprehensive loss(54,454)(50,581)
Other equity 5,548 7,069 
Total shareholders' equity1,029,320 943,277 
Total Liabilities and Shareholders’ Equity$1,873,398 $1,802,801 




See the notes to these consolidated financial statements.


4

Materion Corporation and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
Nine Months Ended
October 2,September 26,
(Thousands)20262025
Cash flows from operating activities:
Net income $96,464 $68,250 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion, and amortization57,333 51,551 
Amortization of deferred financing costs in interest expense717 1,647 
Stock-based compensation expense (non-cash)12,506 8,520 
Deferred income tax expense (benefit)(2,180)(43)
Changes in assets and liabilities:
Accounts receivable
(46,747)1,701 
Inventory(24,202)(21,980)
Prepaid and other current assets410 (21,089)
Accounts payable and accrued expenses56,469 21,532 
Unearned revenue(5,788)(13,142)
Interest and taxes payable
(2,387)(1,550)
Other-net98 (11,673)
Net cash provided by operating activities142,693 83,724 
Cash flows from investing activities:
Payments for purchase of property, plant, and equipment(44,291)(38,741)
Payments for mine development(13,591)(19,952)
Proceeds from sale of property, plant, and equipment— 932 
Payments for acquisition, net of cash acquired— (19,500)
Net cash used in investing activities(57,882)(77,261)
Cash flows from financing activities:
Proceeds from (repayments of) borrowings under credit facilities, net(57,429)30,574 
Repayment of debt(4,495)(16,609)
Principal payments under finance lease obligations(456)(456)
Cash dividends paid(8,950)(8,608)
Deferred financing costs— (2,935)
Repurchase of common stock— (7,843)
Payments of withholding taxes for stock-based compensation awards(11,540)(2,540)
Net cash used in financing activities(82,870)(8,417)
Effects of exchange rate changes(218)1,652 
Net change in cash and cash equivalents1,723 (302)
Cash and cash equivalents at beginning of period13,681 16,713 
Cash and cash equivalents at end of period$15,404 $16,411 

See notes to these consolidated financial statements.


5

Materion Corporation and Subsidiaries
Consolidated Statements of Shareholders' Equity
(Unaudited)
Common SharesShareholders' Equity
(Thousands, except per share amounts)Common SharesCommon Shares Held in TreasuryCommon
Stock		Retained
Earnings		Common
Stock in
Treasury		Accumulated Other
Comprehensive
Loss		Other
Equity		Total
Balance at July 3, 202620,834 6,314 $380,134 $964,469 $(302,376)$(52,848)$5,488 $994,867 
Net income— — — 38,332 — — — 38,332 
Other comprehensive income— — — — — (1,606)— (1,606)
Cash dividends declared ($0.145 per share)
— — — (3,024)— — — (3,024)
Stock-based compensation activity39 (39)13,748 (51)(9,339)— — 4,358 
Payments of withholding taxes for stock-based compensation awards(12)12 — — (3,652)— — (3,652)
Directors’ deferred compensation— — 36 — (51)— 60 45 
Balance at October 2, 202620,861 6,287 $393,918 $999,726 $(315,418)$(54,454)$5,548 $1,029,320 
Balance at June 27, 202520,727 6,421 $345,666 $886,247 $(276,447)$(51,760)$6,939 $910,645 
Net income— — — 25,412 — — — 25,412 
Other comprehensive income— — — — — (1,499)— (1,499)
Cash dividends declared ($0.140 per share)
— — — (2,903)— — — (2,903)
Stock-based compensation activity8 (8)3,557 (65)(409)— — 3,083 
Payments of withholding taxes for stock-based compensation awards(2)2 — — (203)— — (203)
Directors’ deferred compensation— — 24 — (44)— 64 44 
Balance at September 26, 202520,733 6,415 $349,247 $908,691 $(277,103)$(53,259)$7,003 $934,579 



6

Common SharesShareholders' Equity
(Thousands, except per share amounts)Common SharesCommon Shares Held in TreasuryCommon
Stock		Retained
Earnings		Common
Stock in
Treasury		Accumulated Other
Comprehensive
Loss		Other
Equity		Total
Balance at December 31, 202520,735 6,413 $351,901 $912,361 $(277,473)$(50,581)$7,069 $943,277 
Net income— — — 96,464 — — — 96,464 
Other comprehensive loss— — — — — (3,873)— (3,873)
Cash dividends declared ($0.430 per share)
— — — (8,950)— — — (8,950)
Stock-based compensation activity183 (183)41,910 (149)(27,954)— — 13,807 
Payments of withholding taxes for stock-based compensation awards(58)58 — — (11,540)— — (11,540)
Directors' deferred compensation1 (1)107 — 1,549 — (1,521)135 
Balance at October 2, 202620,861 6,287 $393,918 $999,726 $(315,418)$(54,454)$5,548 $1,029,320 
Balance at December 31, 202420,764 6,384 $336,136 $849,111 $(261,880)$(61,046)$6,560 $868,881 
Net income— — — 68,250 — — — 68,250 
Other comprehensive loss— — — — — 7,787 — 7,787 
Cash dividends declared ($0.415 per share)
— — — (8,608)— — — (8,608)
Stock-based compensation activity97 (97)13,041 (62)(4,459)— — 8,520 
Repurchase of common stock(100)100 — — (7,843)— — (7,843)
Payments of withholding taxes for stock-based compensation awards(29)29 — — (2,540)— — (2,540)
Directors' deferred compensation1 (1)70 — (381)— 443 132 
Balance at September 26, 202520,733 6,415 $349,247 $908,691 $(277,103)$(53,259)$7,003 $934,579 
















See notes to these consolidated financial statements.


7

Materion Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)

Note A — Accounting Policies

Basis of Presentation:
The accompanying consolidated financial statements of Materion Corporation and its subsidiaries (referred to herein as the Company, our, we, or us) contain all of the adjustments necessary to present fairly the financial position, results of operations, and cash flows for the interim periods reported. All adjustments were of a normal and recurring nature.
These consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company's 2025 Annual Report on Form 10-K. The interim period results are not necessarily indicative of the results to be expected for the full year.
New Accounting Guidance Issued and Not Yet Adopted:
In November 2024, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which is intended to improve disclosures about a public business entity's expenses and address requests from investors for more detailed information about the types of expenses in commonly presented expense captions. Such information should allow investors to better understand an entity's performance, assess future cash flows, and compare performance over time and with other entities. The amendments will require public business entities to disclose in the notes to the financial statements, at each interim and annual reporting period, specific information about certain costs and expenses, including purchases of inventory, employee compensation, depreciation, and intangible asset amortization included in each expense caption presented on the face of the income statement, and the total amount of an entity's selling expenses. The amendments are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, and may be applied either prospectively or retrospectively. Early adoption is permitted. While the adoption of ASU 2024-03 will result in enhanced disclosures, the Company does not expect it will have a material impact on its financial condition or results of operations.
In September 2025, the FASB issued ASU 2025-06, Intangibles-Goodwill and Other-internal-use software (Subtopic 350-40): Targeted Improvements to the Accounting for internal-use software. The amendments in this ASU make targeted improvements to Subtopic 350-40, Intangibles-Goodwill and Other-internal-use software, to increase the operability of the recognition guidance considering different methods of software development. This ASU is effective for fiscal years beginning after December 15, 2027, and interim periods within those annual reporting periods, with early adoption permitted. The Company is currently evaluating the impact that the adoption of this ASU will have on its condensed consolidated financial statements and related disclosures.
In December 2025, the FASB issued 2025‑10, Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities. This ASU establishes comprehensive U.S. GAAP guidance for the recognition, measurement, and presentation of government grants received by business entities. The amendments incorporate principles similar to those in International Accounting Standards (IAS) 20 and are intended to reduce diversity in practice by providing a consistent framework for accounting for monetary and tangible nonmonetary government grants. This ASU is effective for fiscal years beginning after December 15, 2028, and interim periods within those annual reporting periods, with early adoption permitted. The Company is currently evaluating the impact that the adoption of this ASU will have on its condensed consolidated financial statements and related disclosures.
In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-scope improvements. The amendments clarify the scope, form, and content of interim financial statement disclosures and improve the navigability of Topic 270 without changing existing interim reporting requirements. This ASU is effective for fiscal years beginning after December 15, 2027, and interim periods within those annual reporting periods, with early adoption permitted. The Company is currently evaluating the impact that the adoption of this ASU will have on its interim financial reporting and related disclosures.



8

Materion Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)

Note B — Acquisition

On July 9, 2025, the Company completed the acquisition of certain manufacturing assets for tantalum solutions in Dangjin City, South Korea, from Konasol Co., Ltd., a Korean manufacturer serving the semiconductor and adjacent markets. This strategic investment expands the Company’s global footprint with a facility in Asia to better serve semiconductor customers in that region.
The total purchase price was approximately $19.5 million, which was paid in cash on the date of acquisition. The acquisition and related fees and expenses were funded through available cash and borrowings under the Company's revolving credit facility. Acquisition-related transaction and integration costs totaled $1.8 million in 2025 with no material costs incurred in 2026. These costs are included in selling, general, and administrative expenses in the Consolidated Statements of Income.
The Company accounted for the transaction as a business combination using the acquisition method of accounting and a third-party valuation appraisal, and included the results of operations of the acquisition in its consolidated financial statements from the effective date of the acquisition. The operating results are included within the Company's Electronic Materials segment. Pro forma financial information has not been presented, as revenue and expenses related to the acquisition do not have a material impact on the Company’s consolidated financial statements.
The total purchase price was allocated to identifiable assets and liabilities based upon the preliminary estimates of fair value at the date of the acquisition, which primarily included property, plant and equipment, and a developed technology intangible asset of $2.1 million. To the extent the purchase price exceeds the fair value of the net identifiable tangible and intangible assets acquired, such excess was allocated to goodwill and approximated $14.9 million. The goodwill is deductible for Korean tax purposes. The fair value of the acquired intangible asset is determined based on an income approach, using estimates and assumptions that are deemed reasonable by the Company. These assumptions were subject to revision as additional information regarding the facts and circumstances that existed as of the acquisition date were obtained, primarily related to intangible assets. No material provisional adjustments to the acquisition accounting were recorded during 2026, and the purchase price allocation was finalized.

Note C — Segment Reporting
 
The Company has the following reportable segments: Performance Materials, Electronic Materials, Precision Optics, and Other. The Company’s reportable segments represent components of the Company for which separate financial information is available that is utilized on a regular basis by the Chief Executive Officer, the Company's Chief Operating Decision Maker (CODM), in determining how to allocate the Company’s resources and evaluate performance.
Performance Materials provides advanced engineered solutions comprised of beryllium and non-beryllium containing alloy systems and custom engineered parts in strip, bulk, rod, plate, bar, tube, and other customized shapes.
Electronic Materials produces advanced chemicals, microelectric packaging, precious metal, non-precious metal, and specialty metal products, including vapor deposition targets, frame lid assemblies, clad and precious metal preforms and high temperature braze materials.
Precision Optics produces thin film coatings, optical filter materials, sputter-coated, and precision-converted thin film materials.
The Other reportable segment includes unallocated corporate costs and assets.
The primary measures used by management to allocate resources and measure the financial performance of each segment are earnings before interest and taxes (EBIT) and earnings before interest, taxes, depreciation and amortization (EBITDA). Segment EBIT is the measure of segment profit or loss that is most consistent with the measurement principles used in measuring the corresponding amounts in the Company's consolidated financial statements. The CODM evaluates segment EBIT in assessing the profitability and operating performance of each reportable segment and uses segment EBITDA to evaluate operating performance excluding the effects of depreciation and amortization and to compare performance among periods. The Company believes the use of EBITDA assists in understanding the ongoing operating performance by presenting comparable financial results between periods and believes that by removing the impact of depreciation and amortization and amounts spent on interest and taxes that may vary from year to year, EBITDA provides a performance measure that reflects the impact to operations from trends in changes in net sales, gross margin and operating expenses,


9
Materion Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)
providing a perspective not immediately apparent from net income (loss) and operating income (loss). The adjustments the Company makes to derive the financial measure of EBITDA excludes items which may cause short-term fluctuations in net income (loss) and operating income (loss) and which the Company does not consider to be the fundamental attributes or primary drivers of its business. EBITDA provides disclosure on the same basis as that used by the CODM to evaluate financial performance on a reportable segment basis.



Third quarter ended October 2, 2026
Performance MaterialsElectronic MaterialsPrecision OpticsOtherConsolidated
Net sales (1)
$198,978 $336,608 $31,704 $— $567,290 
Less:
Cost of sales151,522 291,033 21,030 4 463,589 
Selling, general and administrative expense 15,484 11,075 4,906 11,060 42,525 
Other segment items (2)
1,738 6,077 2,533 51 10,399 
Segment EBIT$30,234 $28,423 $3,235 $(11,115)$50,777 
Plus:
Segment depreciation, depletion and amortization12,274 4,713 2,238 494 19,719 
Segment EBITDA$42,508 $33,136 $5,473 $(10,621)$70,496 
Income tax expense5,840 
Interest expense - net6,605 
Depreciation, depletion and amortization19,719 
Net Income$38,332 


10
Materion Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)
Third quarter ended September 26, 2025
Performance MaterialsElectronic MaterialsPrecision OpticsOtherConsolidated
Net sales (1)
$170,787 $246,837 $27,184 $— $444,808 
Less:
Cost of sales125,909 213,746 18,892 138 358,685 
Selling, general and administrative expense 14,228 10,731 4,896 8,401 38,256 
Other segment items (2)
4,018 5,878 2,442 (125)12,213 
Segment EBIT$26,632 $16,482 $954 $(8,414)$35,654 
Plus:
Segment depreciation, depletion and amortization10,279 4,443 2,277 505 17,504 
Segment EBITDA$36,911 $20,925 $3,231 $(7,909)$53,158 
Income tax expense2,698 
Interest expense - net7,544 
Depreciation, depletion and amortization17,504 
Net Income$25,412 
First nine months ended October 2, 2026
Performance MaterialsElectronic MaterialsPrecision OpticsOtherConsolidated
Net sales (1)
$562,592 $1,075,154 $93,275 $— $1,731,021 
Less:
Cost of sales432,511 949,003 59,618 10 1,441,142 
Selling, general and administrative expense 44,426 31,969 15,103 29,549 121,047 
Other segment items (2)
6,206 21,675 8,526 1,136 37,543 
Segment EBIT$79,449 $72,507 $10,028 $(30,695)$131,289 
Plus:
Segment depreciation, depletion and amortization35,162 13,990 6,722 1,459 57,333 
Segment EBITDA$114,611 $86,497 $16,750 $(29,236)$188,622 
Income tax expense13,116 
Interest expense - net21,709 
Depreciation, depletion and amortization57,333 
Net Income$96,464 





11
Materion Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)
First nine months ended September 26, 2025
Performance MaterialsElectronic MaterialsPrecision OpticsOtherConsolidated
Net sales (1)
$527,552 $696,059 $73,185 $— $1,296,796 
Less:
Cost of sales385,435 611,969 54,211 221 1,051,836 
Selling, general and administrative expense 42,451 30,475 13,598 22,216 108,740 
Other segment items (2)
10,889 16,982 8,720 (1,272)35,319 
Segment EBIT$88,777 $36,633 $(3,344)$(21,165)$100,901 
Plus:
Segment depreciation, depletion and amortization29,901 12,971 7,192 1,487 51,551 
Segment EBITDA$118,678 $49,604 $3,848 $(19,678)$152,452 
Income tax expense9,960 
Interest expense - net22,691 
Depreciation, depletion and amortization51,551 
Net Income$68,250 


(1) Excludes inter-segment sales of $2.9 million and $1.0 million for the third quarter of 2026 and 2025, respectively, and $7.7 million and $5.6 million for the first nine months of 2026 and 2025, respectively, for Performance Materials. Inter-segment sales are eliminated in consolidation.

(2) Other segment items for each reportable segment include:
•Research and development expense
•Restructuring expense
•Other operating expense - primarily comprised of metal consignment fees, intangible amortization and foreign currency (gains)/losses as further detailed in Note F
•Non-operating expenses primarily related to pension costs

The following table disaggregates revenue for each segment by end market for the third quarter and first nine months of 2026 and 2025:


12
Materion Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)
 (Thousands)Performance MaterialsElectronic MaterialsPrecision OpticsOtherTotal
Third Quarter 2026
End Market
Semiconductor$3,905 $275,621 $2,851 $— $282,377 
Industrial32,362 15,045 7,493 — 54,900 
Aerospace and defense59,992 4,311 9,791 — 74,094 
Consumer electronics47,648 135 3,394 — 51,177 
Automotive17,857 737 2,216 — 20,810 
Energy9,500 22,857 — — 32,357 
Life sciences2,373 9,269 5,567 — 17,209 
Other25,341 8,633 392 — 34,366 
Total$198,978 $336,608 $31,704 $— $567,290 
Third Quarter 2025
End Market
Semiconductor$2,005 $205,821 $1,120 $— $208,946 
Industrial31,141 9,020 6,656 — 46,817 
Aerospace and defense40,326 2,357 8,298 — 50,981 
Consumer electronics48,206 416 4,027 — 52,649 
Automotive15,206 669 1,628 — 17,503 
Energy8,448 19,619 — — 28,067 
Life sciences2,465 6,497 5,097 — 14,059 
Other22,990 2,438 358 — 25,786 
Total$170,787 $246,837 $27,184 $— $444,808 



13
Materion Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)
 (Thousands)Performance MaterialsElectronic MaterialsPrecision OpticsOtherTotal
First Nine Months 2026
End Market
Semiconductor$10,102 $888,685 $7,079 $— $905,866 
Industrial99,526 40,473 23,037 — 163,036 
Aerospace and defense165,063 13,167 29,546 — 207,776 
Consumer electronics117,355 14,237 10,717 — 142,309 
Automotive53,184 1,231 6,138 — 60,553 
Energy38,399 93,407 — — 131,806 
Life sciences6,089 6,508 16,306 — 28,903 
Other72,874 17,446 452 — 90,772 
Total$562,592 $1,075,154 $93,275 $— $1,731,021 
First Nine Months 2025
End Market
Semiconductor$7,390 $579,064 $2,690 $— $589,144 
Industrial93,424 27,779 18,678 — 139,881 
Aerospace and defense126,382 6,137 21,812 — 154,331 
Consumer electronics149,913 1,682 10,343 — 161,938 
Automotive48,243 3,211 4,774 — 56,228 
Energy37,388 53,002 — — 90,390 
Life sciences7,323 18,886 14,042 — 40,251 
Other57,489 6,298 846 — 64,633 
Total$527,552 $696,059 $73,185 $— $1,296,796 

Note D — Revenue Recognition

Net sales consist primarily of revenue from the sale of precious and non-precious specialty metals, beryllium and copper-based alloys, beryllium composites, and other products into numerous end markets. The Company requires an agreement with a customer that creates enforceable rights and performance obligations. The Company generally recognizes revenue in an amount that reflects the consideration to which it expects to be entitled upon satisfaction of a performance obligation by transferring control over a product to the customer. Control over a product is generally transferred to the customer when the Company has a present right to payment, the customer has legal title, the customer has physical possession, the customer has the significant risks and rewards of ownership, and/or the customer has accepted the product.

Transaction Price Allocated to Future Performance Obligations: Accounting Standards Codification (ASC) 606, Revenue from Contracts with Customers, requires that the Company disclose the aggregate amount of transaction price that is allocated to performance obligations that have not yet been satisfied at October 2, 2026. Remaining performance obligations include non-cancelable purchase orders and customer contracts. The guidance provides certain practical expedients that limit this requirement. As such, the Company does not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less.

After considering the practical expedient at October 2, 2026 and December 31, 2025, the aggregate amount of the transaction price allocated to remaining performance obligations was approximately $119.6 million and $21.9 million, respectively.



14

Materion Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)
Contract Balances: The timing of revenue recognition, billings, and cash collections resulted in the following contract assets and contract liabilities:
(Thousands)
October 2, 2026
December 31, 2025
$ change% change
Accounts receivable, trade
$271,558 $223,763 $47,795 21 %
Unbilled receivables
52,626 46,548 6,078 13 %
Unearned revenue
11,967 12,685 (718)(6)%
Accounts receivable, trade represents payments due from customers relating to the transfer of the Company’s products and services. The Company believes that its receivables are collectible and appropriate allowances for doubtful accounts have been recorded. Impairment losses (bad debt) incurred related to our receivables were immaterial during the third quarter and first nine months of 2026.

During 2024, the Company entered into a factoring agreement to sell certain receivables to a third-party financial institution. The transfer of the receivables constitute purchases and sales of receivables resulting in a reduction of trade receivables on the consolidated balance sheets and the proceeds are included in the cash flows from operating activities in the consolidated statements of cash flows. The Company did not sell any receivables in the third quarter of 2026. The Company sold a total of $8.1 million of receivables resulting in a loss on sale of $0.1 million for the first nine months of 2026. The Company sold a total of $59.4 million of receivables resulting in a loss on sale of $0.6 million for the first nine months of 2025. The Company sold $20.5 million of receivables in the third quarter of 2025 and a total of $59.4 million of receivables in the first nine months of 2025. The Company recorded a loss on sale of $0.2 million and $0.6 million for the third quarter and first nine months of 2025, respectively. Total receivables sold under this program amount to $116.4 million.
Unbilled receivables represent expenditures on contracts, plus applicable profit margin, not yet billed. Unbilled receivables are generally billed and collected within one year. Billings made on contracts are recorded as a reduction of unbilled receivables.

Unearned revenue is recorded for consideration received from customers in advance of satisfaction of the related performance obligations. The Company recognized approximately $8.0 million of the December 31, 2025 short-term unearned amounts as revenue during the first nine months of 2026.

As a practical expedient, the Company does not adjust the promised amount of consideration for the effects of a significant financing component because the period between the transfer of a product or service to a customer and when the customer pays for that product or service will be one year or less. The Company does not include extended payment terms in its contracts with customers.

Note E — Restructuring

In fiscal years 2025 and 2024, we announced restructuring plans that were both designed to reduce costs and expenses in response to macroeconomic conditions and current operating performance. These actions impacted all three of our business segments as well as Corporate. The restructuring programs reduce annual cost of sales and operating expenses.
In 2026, the Company continued to implement restructuring actions across all segments. In connection with these actions, we recorded restructuring expenses of $0.1 million and $2.7 million in the three and nine months ended October 2, 2026, respectively, compared to $0.2 million and $2.7 million in the three and nine months ended September 26, 2025, respectively. All of these charges were associated with workforce reduction, including severance and other personnel-related costs. As of the October 2, 2026, we have substantially completed the restructuring activities expected for the fiscal year 2026.
The activity in the accrued balances incurred in relation to restructuring during the nine months ended October 2, 2026 and September 26, 2025, were as follows:


15

Materion Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)
Reduction in Force
(Thousands)Performance MaterialsElectronic MaterialsPrecision OpticsOtherConsolidated
Balance at December 31, 2025$— $83 $59 $9 $151 
Additional Charges694 449 878 690 2,711 
Cash Payments(694)(521)(937)(667)(2,819)
Balance at October 2, 2026
$— $11 $— $32 $43 
Reduction in Force
(Thousands)Performance MaterialsElectronic MaterialsPrecision OpticsOtherConsolidated
Balance at December 31, 2024$56 $293 $60 $408 $817 
Additional Charges481 789 1,428 31 2,729 
Cash Payments(537)(1,067)(1,457)(325)(3,386)
Balance at September 26, 2025
$— $15 $31 $114 $160 

Note F — Other-net

Other-net for the third quarter and first nine months of 2026 and 2025 is summarized as follows: 
Third Quarter EndedNine Months Ended
October 2,September 26,October 2,September 26,
(Thousands)2026202520262025
Amortization of intangible assets$2,594 $2,699 $7,799 $8,394 
Metal consignment fees3,871 3,186 14,301 7,860 
Foreign currency loss (gain)280 492 1,121 (459)
Other items(2,573)(213)(6,616)(727)
Total$4,172 $6,164 $16,605 $15,068 

Note G — Income Taxes

The Company's effective tax rate for the third quarter of 2026 and 2025 was 13.2% and 9.6%, respectively, and 12.0% and 12.7% for the first nine months of 2026 and 2025, respectively. The effective tax rate for 2026 is lower than the statutory tax rate primarily due to the benefits of foreign-derived deduction eligible income, percentage depletion and foreign tax credits. The effective tax rate for 2025 was lower than the statutory tax rate primarily due to the benefits of percentage depletion, the advanced manufacturing production credit, and the foreign derived intangible income deduction.

The effective tax rate for the first nine months of 2026 also includes a $6.8 million net discrete income tax benefit, primarily consisting of excess tax benefits from stock-based compensation awards, the release of a valuation allowance against the deferred tax assets of one of the Company’s foreign subsidiaries and prior-year return-to-provision adjustments. The effective tax rate for the first nine months of 2025 included a net discrete income tax benefit of $0.7 million, primarily consisting of prior-year return-to-provision adjustments.

Government Tax Credits

Pursuant to The Inflation Reduction Act of 2022 (IRA), the Company is eligible for the Advanced Manufacturing Production Credit (production credit). The production credit provides an annual cash benefit for a portion of the production costs for the sale of certain critical minerals produced in the U.S. and sold during the year. The Company records the production credit as a reduction in cost of goods sold as the applicable items are produced and sold. U.S. GAAP does not address the accounting for government grants received by a business entity that are outside the scope of ASC 740. Our accounting policy is to


16

Materion Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)
analogize to IAS 20, Accounting for Government Grants and Disclosure of Government Assistance, under IFRS Accounting Standards. We recognize the benefit of the production credit by applying IAS 20 in pretax income on a systematic basis in line with its recognition of the expenses that the grant is intended to compensate.

Pillar Two

The Organization for Economic Co-operation and Development (OECD) introduced rules to establish a global minimum corporate tax rate, commonly referred to as Pillar Two. Many of the key non-U.S. jurisdictions where the Company operates have enacted Pillar Two legislation. While the U.S. has negotiated a “side-by-side” arrangement for the existing U.S. minimum taxes with the intent to exempt U.S. multinational companies from certain Pillar Two provisions, the timing and consistency of implementation across jurisdictions continue to evolve. As more countries adopt the “side-by-side” provisions in 2026, the Company’s Pillar Two tax expense will decrease accordingly. We will continue to evaluate the impact of future Pillar Two legislation on the Company’s effective tax rate.

Note H — Earnings Per Share (EPS)

The following table sets forth the computation of basic and diluted EPS:
Third Quarter EndedNine Months Ended
October 2,September 26,October 2,September 26,
(Thousands, except per share amounts)2026202520262025
Numerator for basic and diluted EPS:
Net income$38,332 $25,412 $96,464 $68,250 
Denominator:
Denominator for basic EPS:
Weighted-average shares outstanding20,848 20,731 20,810 20,763 
Effect of dilutive securities:
Stock appreciation rights82 49 82 40 
Restricted stock units125 52 123 45 
Performance-based restricted stock units108 51 101 45 
Diluted potential common shares315 152 306 130 
Denominator for diluted EPS:
Adjusted weighted-average shares outstanding21,163 20,883 21,116 20,893 
Basic EPS$1.84 $1.23 $4.64 $3.29 
Diluted EPS$1.81 $1.22 $4.57 $3.27 

Adjusted weighted-average shares outstanding - diluted exclude securities totaling 57 and 158,282 for the quarters ended October 2, 2026 and September 26, 2025, respectively, and 44,857 and 149,694 for the nine months ended October 2, 2026 and September 26, 2025, respectively. These securities are primarily related to restricted stock units (RSUs) and stock appreciation rights (SARs) with fair market values and exercise prices greater than the average market price of the Company's common shares and were excluded from the dilution calculation as the effect would have been anti-dilutive.



17

Materion Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)
Note I — Inventories

Inventories on the Consolidated Balance Sheets are summarized as follows:
October 2,December 31,
(Thousands)20262025
Raw materials and supplies$114,609 $108,040 
Work in process301,168 298,695 
Finished goods70,166 54,496 
Inventories, net$485,943 $461,231 
The Company maintains the majority of the precious metals and copper and nickel used in production on a consignment basis in order to reduce its exposure to metal market price movements and to reduce its working capital investment. The notional value of off-balance sheet precious metals, copper and nickel was $589.9 million and $526.2 million as of October 2, 2026 and December 31, 2025, respectively.

Note J — Customer Prepayments

In 2020, the Company entered into an investment agreement and a master supply agreement with a customer to procure equipment to manufacture product for the customer. The customer provided prepayments to the Company to fund the necessary infrastructure improvements and procure the equipment necessary to supply the customer with the desired product. The Company owns, operates and maintains the equipment that is being used to manufacture product for the customer.

Revenue will be recognized as the Company fulfills purchase orders and ships the commercial product to the customer, as product delivery is considered the satisfaction of the performance obligation.

Additionally, during the second quarter of 2022, the Company entered into an amendment to the investment agreement with the same customer to procure additional equipment to manufacture product for the customer. In 2023, the Company received the remaining prepayments related to this amendment, the total of which approximated $38.6 million.

As of October 2, 2026 and December 31, 2025, $34.5 million and $47.5 million, respectively, of prepayments are classified as Unearned income on the Consolidated Balance Sheets. The prepayments will remain in Unearned income until commercial purchase orders are received for product serviced out of the equipment, at which time a portion of the purchase order value related to prepayments will be reclassified to Unearned revenue. As of October 2, 2026 and December 31, 2025, $2.3 million and $2.4 million of the prepayments, respectively, are classified as Unearned revenue.



18

Materion Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)
Note K — Pensions and Other Post-employment Benefits

The following is a summary of the net periodic benefit (income)/cost for the third quarter and first nine months ended October 2, 2026 and September 26, 2025, respectively, for the pension plans as shown below. The Pension Benefits column aggregates defined benefit pension plans in the U.S., Germany, Liechtenstein, England, and the U.S. supplemental retirement plans. The Other Benefits column includes the domestic retiree medical and life insurance plan.
Pension BenefitsOther Benefits
Third Quarter EndedThird Quarter Ended
October 2,September 26,October 2,September 26,
(Thousands)2026202520262025
Components of net periodic benefit (credit) cost
Service cost$283 $315 $— $11 
Interest cost1,837 1,932 31 58 
Expected return on plan assets(2,363)(2,539)— — 
Amortization of prior service (benefit) cost(21)(23)— — 
Amortization of net loss (gain)259 90 (104)(87)
Net periodic benefit (credit) cost$(5)$(225)$(73)$(18)
Pension BenefitsOther Benefits
Nine Months EndedNine Months Ended
October 2,September 26,October 2,September 26,
(Thousands)2026202520262025
Components of net periodic benefit (credit) cost
Service cost$863 $909 $— $33 
Interest cost5,516 5,769 93 174 
Expected return on plan assets(7,106)(7,575)— — 
Amortization of prior service (benefit) cost(65)(67)— — 
Amortization of net loss (gain)776 269 (312)(262)
Net periodic benefit (credit) cost$(16)$(695)$(219)$(55)


The Company did not make any contributions to its domestic defined benefit plan in the third quarter or first nine months of 2026 or 2025.
The Company reports the service cost component of net periodic benefit cost in the same line item as other compensation costs in operating expenses and the non-service cost components of net periodic benefit cost in Other non-operating (income) expense.


Note L — Accumulated Other Comprehensive Income (Loss)

Changes in the components of accumulated other comprehensive income, including the amounts reclassified, for the third quarter and first nine months of 2026 and 2025 are as follows:


19

Materion Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)
Gains and Losses on Cash Flow Hedges
(Thousands)Foreign CurrencyInterest RatePrecious MetalsTotalPension and Post-Employment BenefitsForeign Currency TranslationTotal
Balance at July 3, 2026
$1,411 $782 $2 $2,195 $(52,214)$(2,829)$(52,848)
Other comprehensive income (loss) before reclassifications(38)999 — 961 — (2,155)(1,194)
Amounts reclassified from accumulated other comprehensive income (loss)29 (471)— (442)191 — (251)
Net current period other comprehensive (loss) income before tax(9)528 — 519 191 (2,155)(1,445)
Deferred taxes(2)122 — 120 41 — 161 
Net current period other comprehensive (loss) income after tax(7)406 — 399 150 (2,155)(1,606)
Balance at October 2, 2026
$1,404 $1,188 $2 $2,594 $(52,064)$(4,984)$(54,454)
Balance at June 27, 2025
$1,316 $1,888 $2 $3,206 $(53,648)$(1,318)$(51,760)
Other comprehensive (loss) income before reclassifications118 122 — 240 — (903)(663)
Amounts reclassified from accumulated other comprehensive income (loss)(9)(797)— (806)(164)— (970)
Net current period other comprehensive (loss) income before tax109 (675)— (566)(164)(903)(1,633)
Deferred taxes24 (155)— (131)(3)— (134)
Net current period other comprehensive (loss) income after tax85 (520)— (435)(161)(903)(1,499)
Balance at September 26, 2025
$1,401 $1,368 $2 $2,771 $(53,809)$(2,221)$(53,259)



20

Materion Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)
Gains and Losses on Cash Flow Hedges
(Thousands)Foreign CurrencyInterest RatePrecious MetalsTotalPension and Post-Employment BenefitsForeign Currency TranslationTotal
Balance at December 31, 2025
$1,406 $899 $2 $2,307 $(52,441)$(447)$(50,581)
Other comprehensive income (loss) before reclassifications(239)1,779 — 1,540 — (4,537)(2,997)
Amounts reclassified from accumulated other comprehensive income (loss)237 (1,403)— (1,166)500 — (666)
Net current period other comprehensive (loss) income before tax(2)376 — 374 500 (4,537)(3,663)
Deferred taxes— 87 — 87 123 — 210 
Net current period other comprehensive (loss) income after tax(2)289 — 287 377 (4,537)(3,873)
Balance at October 2, 2026
$1,404 $1,188 $2 $2,594 $(52,064)$(4,984)$(54,454)
Balance at December 31, 2024$1,638 $3,545 $2 $5,185 $(54,702)$(11,529)$(61,046)
Other comprehensive income (loss) before reclassifications(206)(473)— (679)1,553 9,308 10,182 
Amounts reclassified from accumulated other comprehensive income (loss)(103)(2,354)— (2,457)(290)— (2,747)
Net current period other comprehensive (loss) income before tax(309)(2,827)— (3,136)1,263 9,308 7,435 
Deferred taxes(72)(650)— (722)370 — (352)
Net current period other comprehensive (loss) income after tax(237)(2,177)— (2,414)893 9,308 7,787 
Balance at September 26, 2025$1,401 $1,368 $2 $2,771 $(53,809)$(2,221)$(53,259)
Reclassifications from accumulated other comprehensive income (loss) of gains and losses on foreign currency cash flow hedges are recorded in Net sales in the Consolidated Statements of Income. Reclassifications from accumulated other comprehensive income (loss) of gains and losses on precious metal and copper cash flow hedges are recorded in Cost of sales in the Consolidated Statements of Income. Reclassifications from accumulated other comprehensive income (loss) of gains and losses on the interest rate cash flow hedge is recorded in Interest expense in the Consolidated Statements of Income. Refer to Note O for additional details on cash flow hedges.
Reclassifications from accumulated other comprehensive income (loss) for pension and post-employment benefits are included in the computation of the net periodic pension and post-employment benefit expense. Refer to Note K for additional details on pension and post-employment expenses.



21

Materion Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)
Note M — Stock-based Compensation Expense

Stock-based compensation expense, which includes awards settled in shares, was $4.3 million and $13.0 million in the third quarter and first nine months of 2026, respectively, compared to $3.2 million and $8.8 million, respectively, in the same periods of 2025.
The Company granted 47,436 SARs to certain employees during the first nine months of 2026. The weighted-average exercise price per share and weighted-average fair value per share of the SARs granted during the nine months ended October 2, 2026 were $166.59 and $56.70, respectively. The Company estimated the fair value of the SARs using the following weighted-average assumptions in the Black-Scholes model:
Risk-free interest rate3.62 %
Dividend yield0.34 %
Volatility34.0 %
Expected term (in years)4.8

The Company granted 93,726 stock-settled RSUs to certain employees during the first nine months of 2026. The Company measures the fair value of stock-settled RSUs based on the closing market price of a share of Materion common stock on the date of the grant. The weighted-average fair value per share was $162.72 for stock-settled RSUs granted to employees during the nine months ended October 2, 2026. RSUs are generally expensed over the vesting period of three years for employees.
The Company granted stock-settled performance-based restricted stock units (PRSUs) to certain employees in the first nine months of 2026. The weighted-average fair value of the stock-settled PRSUs was $206.28 per share and will be expensed over the vesting period of three years. The final payout to the employees for all PRSUs will be based upon the Company’s return on invested capital and its total return to shareholders over the vesting period relative to a peer group’s performance over the same period.
At October 2, 2026, unrecognized compensation cost related to the unvested portion of all stock-based awards was approximately $27.7 million, and is expected to be recognized over the remaining vesting period of the respective grants.

Note N — Fair Value of Financial Instruments

The Company measures and records financial instruments at fair value. A hierarchy is used for those instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and the Company’s assumptions (unobservable inputs). The hierarchy consists of three levels:
Level 1 — Quoted market prices in active markets for identical assets and liabilities;
Level 2 — Inputs other than Level 1 inputs that are either directly or indirectly observable; and
Level 3 — Unobservable inputs developed using estimates and assumptions developed by the Company, which reflect

those that a market participant would use.


22

Materion Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)
The following table summarizes the financial instruments measured at fair value in the Consolidated Balance Sheets as of October 2, 2026 and December 31, 2025: 
(Thousands)Total Carrying Value in the Consolidated Balance SheetsQuoted Prices
in  Active
Markets  for
Identical
Assets
(Level 1)		Significant
Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)
20262025202620252026202520262025
Financial Assets
Deferred compensation investments$7,849 $7,175 $7,849 $7,175 $— $— $— $— 
Foreign currency forward contracts614 80 — — 614 80 — — 
Interest rate swap1,550 1,491 — — 1,550 1,491 — — 
Precious metal swaps— — — — — — — — 
Total$10,013 $8,746 $7,849 $7,175 $2,164 $1,571 $— $— 
Financial Liabilities
Deferred compensation liability$7,849 $7,175 $7,849 $7,175 $— $— $— $— 
Foreign currency forward contracts1,564 490 — — 1,564 490 — — 
Interest Rate Swap8 325 — — 8 325 — — 
Precious metal swaps— — — — — — — — 
Total$9,421 $7,990 $7,849 $7,175 $1,572 $815 $— $— 
The Company uses a market approach to value the assets and liabilities for financial instruments in the table above. Outstanding contracts are valued through models that utilize market observable inputs, including both spot and forward prices, for the same underlying currencies, metals, and interest rates. The carrying values of the other working capital items and debt in the Consolidated Balance Sheets approximate fair values as of October 2, 2026 and December 31, 2025. The Company's deferred compensation investments and liabilities are based on the fair value of the investments corresponding to the employees’ investment selections, primarily in mutual funds, based on quoted prices in active markets for identical assets. Deferred compensation investments are primarily presented in Other assets. Deferred compensation liabilities are primarily presented in Other long-term liabilities.

Note O — Derivative Instruments and Hedging Activity

The Company uses derivative contracts to hedge exposure to movements in interest rates associated with borrowings, foreign currency exposures, and precious metal exposures. The objectives and strategies for using derivatives in these areas are as follows:
Interest Rate. On March 4, 2022, the Company entered into a $100.0 million interest rate swap to hedge the interest rate risk on the Credit Agreement described in Note Q. The swap hedges the change in 1-month Secured Overnight Financial Rate (SOFR) from March 4, 2022 to November 2, 2026. On March 21, 2023, the Company entered into two $50.0 million interest rate swaps to hedge the interest rate risk on the Credit Agreement.
The Company entered into additional swaps in 2026 to hedge the interest rate risk on the Credit Agreement. On April 2, 2026 and June 11, 2026, the Company entered into forward starting interest rate swaps of $25.0 million and $15.0 million, respectively. These swaps will hedge changes in 1-month SOFR from November 2, 2026 to June 25, 2030. The Company further entered into three additional swaps on September 15, 2026, for $30.0 million, $25.0 million, and $25.0 million, in a layered approach that will hedge the change in 1-month SOFR from November 2, 2026 to May 7, 2027, May 5, 2028, and November 2, 2029, respectively. The purpose of these hedges is to manage the risk of changes in the monthly interest payments attributable to changes in the benchmark interest rate.


23

Materion Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)
Foreign Currency.    The Company sells a portion of its products to overseas customers in their local currencies, primarily the euro and yen. The Company secures foreign currency derivatives, mainly forward contracts and options, to hedge these anticipated sales transactions. The purpose of the hedge program is to protect against the reduction in the dollar value of foreign currency sales from adverse exchange rate movements. Should the dollar strengthen significantly, the decrease in the translated value of the foreign currency sales should be partially offset by gains on the hedge contracts. Depending upon the methods used, the hedge contracts may limit the benefits from a weakening U.S. dollar.
The use of forward contracts locks in a firm rate and eliminates any downside from an adverse rate movement as well as any benefit from a favorable rate movement. The Company may from time to time choose to hedge with options or a tandem of options, known as a collar. These hedging techniques can limit or eliminate the downside risk but can allow for some or all of the benefit from a favorable rate movement to be realized. Unlike a forward contract, a premium is paid for an option; collars, which are a combination of a put and call option, may have a net premium but can be structured to be cash neutral. The Company will primarily hedge with forward contracts due to the relationship between the cash outlay and the level of risk.
The use of foreign currency derivative contracts is governed by policies approved by the Audit Committee of the Board of Directors. A team consisting of senior financial managers reviews the estimated exposure levels, as defined by budgets, forecasts, and other internal data, and determines the timing, amounts, and nature of instruments to use to hedge exposures. Management analyzes the effective hedged rates and the actual and projected gains and losses on the hedging transactions against the program objectives, targeted rates, and levels of risk assumed. Foreign currency contracts are typically layered in at different times for a specified exposure period in order to minimize the impact of market rate movements.
Precious Metals.    The Company maintains the majority of its precious metal production requirements on consignment in order to reduce its working capital investment and the exposure to metal price movements. When a product containing precious metal is fabricated and delivered to the customer, the metal content is purchased out of consignment based on the current market price. The price paid by the Company for the precious metal forms the basis for the price charged to the customer for the metal content in the product. This methodology allows for changes in either direction in the market prices of the precious metals used by the Company to be passed through to the customer and reduces the impact changes in prices could have on the Company's margins and operating profit. The consigned metal is owned by precious metal consignors that charge the Company consignment fees based upon the value of the metal as it fluctuates while on consignment. Each precious metal consignor retains title to its consigned precious metal until it is purchased by the Company, and it is the Company’s typical practice to purchase metal out of consignment only after a product containing that metal has been purchased by one of our customers.
In certain instances, a customer may want to fix the price for the precious metal at the time the sales order is placed rather than at the time of shipment. Setting the sales price at a different date than when the material would be purchased out of consignment potentially creates an exposure to movements in the market price of the metal. Therefore, in these limited situations, the Company may elect to enter into a forward contract to purchase precious metal. The forward contract allows the Company to purchase metal at a fixed price on a specific future date. The price in the forward contract serves as the basis for the price to be charged to the customer. By doing so, the selling price and purchase price are matched, and the Company's price exposure is reduced.
The Company refines precious metal-containing materials for its customers and typically will purchase the refined metal from the customer at current market prices. In limited circumstances, the customer may want to fix the price to be paid at the time of the order as opposed to when the material is refined. The customer may also want to fix the price for a set period of time. The Company may then elect to enter into a hedge contract, either a forward contract or a swap, to fix the price for the estimated quantity of metal to be refined and purchased, thereby reducing the exposure to adverse movements in the price of the metal. The Company may also enter into hedges to mitigate the risk relating to the prices of the metals that we process or refine.
In certain circumstances, the Company also refines metal from the customer and may retain a portion of the refined metal as payment. The Company may elect to enter into a forward contract to sell precious metal to reduce the Company's price exposure in these instances.


24

Materion Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)
The Company may, from time to time, elect to purchase precious metal and hold in inventory rather than on consignment due to potential credit line limitations or other factors. These purchases are infrequent and, when made are typically held for a short duration. A forward contract will be secured at the time of the purchase to fix the price to be paid when the metal is transferred back to the consignment line, thereby limiting any price exposure during the time when the metal was owned by the Company.
The Company will only enter into a derivative contract if there is an underlying identified exposure. Contracts are typically held to maturity. The Company does not engage in derivative trading activities and does not use derivatives for speculative purposes. The Company only uses hedge contracts that are denominated in the same currency or metal as the underlying exposure.
All derivatives are recorded on the balance sheet at fair value. If a derivative is designated and effective as a cash flow hedge, changes in the fair value of the derivative are recognized in other comprehensive income (OCI) and reclassified into income in the same period or periods during which the hedged transaction affects earnings. The ineffective portion of a derivative's fair value, if any, is recognized in earnings immediately. If a derivative is not a hedge, changes in the fair value are adjusted through income. The fair values of the outstanding derivatives are recorded on the balance sheet as assets (if the derivatives are in a gain position) or liabilities (if the derivatives are in a loss position). The derivative assets and liabilities are classified as short-term or long-term depending upon the contract maturity date.
The following table summarizes the notional amount and the fair value of the Company’s outstanding derivatives not designated as hedging instruments (on a gross basis) and the balance sheet classification as of October 2, 2026 and December 31, 2025:
October 2, 2026December 31, 2025
(Thousands)Notional
Amount		Fair
Value		Notional
Amount		Fair
Value
Foreign currency forward contracts
Prepaid and other current assets$16,650 $611 $6,240 $76 
Other liabilities and accrued items36,766 1,562 56,174 489 
These outstanding foreign currency derivatives were related to balance sheet hedges and intercompany loans. Other-net included $1.6 million and $0.2 million of foreign currency losses related to derivatives in the third quarter and first nine months of 2026, respectively, compared to $0.1 million and $2.1 million of foreign currency losses in the third quarter and first nine months of 2025, respectively.


25

Materion Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)
The following table summarizes the notional amount and the fair value of the Company’s outstanding derivatives designated as cash flow hedges (on a gross basis) and balance sheet classification as of October 2, 2026 and December 31, 2025:
October 2, 2026
Fair Value
(Thousands)Notional
Amount		Prepaid and other current assetsOther assetsOther liabilities and accrued itemsOther long-term liabilities
Foreign currency forward contracts - yen$570 $3 $— $2 $— 
Foreign currency forward contracts - euro— — — — — 
Precious metal swaps— — — — — 
Interest rate swap320,000 199 1,351 8 — 
Total$320,570 $202 $1,351 $10 $— 
December 31, 2025
Fair Value
Notional
Amount		Prepaid and other current assetsOther assetsOther liabilities and accrued itemsOther long-term liabilities
Foreign currency forward contracts - yen$579 $3 $— $— $— 
Foreign currency forward contracts - euro— — — — — 
Precious metal swaps— — — — — 
Interest rate swaps200,000 1,491 — 325 — 
Total$200,579 $1,494 $— $325 $— 

All of the contracts summarized above were designated and effective as cash flow hedges. We expect to reclassify $0.2 million of net gains into earnings in the next 12 months contemporaneously with the earnings effects of the related forecasted transactions. At October 2, 2026, the maximum term of derivative instruments that hedge forecasted transactions was approximately four years. Refer to Note L for further details related to OCI.
The following table summarizes the amounts reclassified from accumulated other comprehensive income relating to the Company’s outstanding derivatives designated as cash flow hedges and associated income statement classification as of the third quarter and first nine months of 2026 and 2025: 
Third Quarter Ended
(Thousands)October 2, 2026September 26, 2025
Hedging relationshipLine item
Foreign currency forward contractsNet sales$29 $(9)
Precious metal swapsCost of sales— — 
Interest rate swapInterest expense - net(471)(797)
Total$(442)$(806)


26

Materion Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)
Nine Months Ended
(Thousands)October 2, 2026September 26, 2025
Hedging relationshipLine item
Foreign currency forward contractsNet sales$237 $(103)
Precious metal swapsCost of sales— — 
Interest rate swapInterest expense - net(1,403)(2,354)
Total$(1,166)$(2,457)

Note P — Contingencies
Legal Proceedings. The Company is party to several pending legal proceedings and claims arising in the normal course of business. The Company records a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. In the event the Company determines that a loss is not probable, but is reasonably possible, and it becomes possible to develop what the Company believes to be a reasonable range of possible loss, then the Company will include disclosure related to such matters. To the extent there is a reasonable possibility that the losses could exceed any amounts accrued, the Company will adjust the accrual in the period the determination is made, disclose an estimate of the additional loss or range of loss, indicate that the estimate is immaterial with respect to its financial statements as a whole or, if the amount of such adjustment cannot be reasonably estimated, disclose that an estimate cannot be made.
On May 13, 2026, the Company received an adverse ruling from the Frankfurt am Main Regional Court in a matter involving Heraeus Metals Germany GmbH & Co. KG (“Heraeus”) related to the theft of 50 kilograms of gold granulate during transport in Germany in 2022. The Company has appealed the ruling. At the time of the incident, the gold was valued at approximately $2.5 million and was valued at approximately $6.7 million as of October 2, 2026, which will fluctuate in future periods as the potential exposure is dependent on future gold prices. The Company expects that approximately $2.5 million of any potential loss will be recoverable under its insurance coverage.
Based on management’s review of the ruling and underlying facts, consultation with legal counsel, and the Company’s appeal, management continues to believe that a loss is not probable at this time. Accordingly, no accrual was recorded at the time of the incident or as of the date of our financial statements. The Company will continue to monitor the appeal process and any changes in facts or circumstances that may affect its assessment.

Environmental Proceedings. The Company has an active environmental compliance program and records reserves for the probable cost of identified environmental remediation projects. The reserves are established based upon analyses conducted by the Company’s engineers and outside consultants and are adjusted from time to time based upon ongoing studies, the difference between actual and estimated costs, and other factors. The reserves may also be affected by rulings and negotiations with regulatory agencies. The undiscounted reserve balance was $2.3 million and $2.5 million at October 2, 2026 and December 31, 2025, respectively, and is included in Other liabilities and accrued items and Other long-term liabilities on the Consolidated Balance Sheet. Environmental projects tend to be long-term, and the final actual remediation costs may differ from the amounts currently recorded.



27

Materion Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)
Note Q — Debt
(Thousands)October 2, 2026December 31, 2025
Borrowings under Credit Agreement$169,125 $221,125 
Borrowings under the Term Loan Facility217,969 222,188 
Overdraft Sweep Facility10,593 15,659 
Foreign debt902 1,670 
Total debt outstanding398,589 460,642 
Current portion of long-term debt(19,609)(22,445)
Gross long-term debt378,980 438,197 
Unamortized deferred financing fees(1,540)(1,849)
Long-term debt$377,440 $436,348 

As of October 2, 2026 and December 31, 2025, the Company had $169.1 million outstanding at an average interest rate of 5.10% and $221.1 million outstanding at an average interest rate of 5.26%, respectively, under its revolving credit facility. The available borrowing capacity under the revolving credit facility as of October 2, 2026 was approximately $275.7 million. The Company has the option to repay or borrow additional funds under the revolving credit facility until the maturity date in 2030.

In connection with the revolving credit facility, the administrative agent provides the Company with an overdraft sweep facility that the Company uses on a daily basis for short-term cash needs. As of October 2, 2026, the overdraft sweep facility had a balance of $10.6 million. This facility allows for an additional $30.0 million of liquidity. The amended and restated credit agreement governing the revolving credit facility and the term loan facility (Credit Agreement) includes covenants subject to a maximum leverage ratio and a minimum fixed charge coverage ratio. We were in compliance with all of our debt covenants as of October 2, 2026.

Other sources of liquidity include uncommitted short-term lines of credit for certain of the Company's foreign subsidiaries, which currently provide for borrowings up to $21.9 million. At October 2, 2026 the Company had borrowings outstanding of $0.4 million which reduced the aggregate availability under these facilities to $21.5 million.

The balance outstanding on the term loan facility as of October 2, 2026 and December 31, 2025 was $218.0 million and $222.2 million, respectively.

At both October 2, 2026 and December 31, 2025, there was $5.2 million outstanding against the letters of credit sub-facility.



Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations
OVERVIEW
We are an integrated producer of high-performance advanced engineered materials used in a variety of electronic, thermal, and structural applications. Our products are sold into numerous end markets, including semiconductor, industrial, aerospace and defense, automotive, consumer electronics, energy, and telecom and data center.



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RESULTS OF OPERATIONS

Third Quarter
Third Quarter Ended
October 2,September 26,$%
(Thousands, except per share data)20262025ChangeChange
Net sales$567,290 $444,808 $122,482 28 %
Value-added sales313,662 263,949 49,713 19 %
Gross margin103,701 86,123 17,578 20 %
Gross margin as a % of net sales18 %19 %
Gross margin as a % of value-added sales33 %33 %
Selling, general, and administrative (SG&A) expense42,525 38,256 4,269 11 %
SG&A expense as a % of net sales7 %9 %
SG&A expense as a % of value-added sales14 %14 %
Research and development (R&D) expense6,505 6,548 (43)(1)%
R&D expense as a % of net sales1 %1 %
R&D expense as a % of value-added sales2 %2 %
Restructuring expense 92 212 (120)(57)%
Other—net4,172 6,164 (1,992)(32)%
Operating profit50,407 34,943 15,464 44 %
Other non-operating (income)—net(370)(711)341 (48)%
Interest expense—net6,605 7,544 (939)(12)%
Income before income taxes44,172 28,110 16,062 57 %
Income tax expense5,840 2,698 3,142 116 %
Net income$38,332 $25,412 $12,920 51 %
Diluted earnings per share$1.81 $1.22 $0.59 48 %

Net sales of $567.3 million in the third quarter of 2026 increased $122.5 million from $444.8 million in the third quarter of 2025. The increase was primarily driven by higher sales in the Electronic Materials segment, while also reflecting growth in both Performance Materials and Precision Optics. The increase in net sales in the Electronic Materials segment was primarily due to higher precious metal pass through costs, increasing net sales by approximately $57.3 million when compared to the prior-year period. At the Company level, this was driven by volume increases in the aerospace and defense (45%), semiconductor (35%), and industrial (17%) end markets. Sales to telecommunications and data center applications, which are included within the other end market, increased 139% compared to the prior-year period. These increases were partially offset by a $3.8 million year over year decrease in the volume of raw material beryllium hydroxide sales within the other end market compared to the third quarter of 2025. See Note C to the Consolidated Financial Statements for additional details on the year over year changes in our net sales by segment and market.

Value-added sales is a non-GAAP financial measure that removes the impact of pass-through metal costs and allows for analysis without the distortion of the movement or volatility in precious metal market prices and changes in mix due to customer-supplied material. Internally, we manage our business on this basis, and a reconciliation of net sales, the most directly comparable GAAP financial measure, to value-added sales is included herein. Value-added sales of $313.7 million in the third quarter of 2026 increased $49.7 million, or 19%, compared to the third quarter of 2025. Volume increases in the aerospace and defense (42%), and semiconductor (40%) end markets were partially offset by a decrease in the automotive (30%) end market. Value-added sales to telecommunications and data center applications, which are included within the other end market, increased 71% compared to the prior-year period. This increase was partially offset by a $3.8 million year over year decrease in the volume of raw material beryllium hydroxide sales, also included within the other end market, compared to the third quarter of 2025.

Gross margin in the third quarter of 2026 was $103.7 million, an increase of 20% compared to the third quarter of 2025. Gross margin expressed as a percentage of net sales was 18% and 19% in the third quarter of 2026 and 2025, respectively. Gross margin expressed as a percentage of value-added sales was 33% in both the third quarter of 2026 and 2025. Gross margin as a percentage of value-added sales remained flat in both the third quarter of 2026 and 2025.


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SG&A expense was $42.5 million in the third quarter of 2026, compared to $38.3 million in the third quarter of 2025. The increase in SG&A expense was primarily due to timing of incentive compensation accruals due to year to date performance. Expressed as a percentage of net sales, SG&A expense was 7% and 9% in the third quarter of 2026 and 2025, respectively. Expressed as a percentage of value-added sales, SG&A expense was 14% in both the third quarter of 2026 and 2025.

R&D expense consists primarily of direct personnel and material costs for product innovation including pre-production development, evaluation, and testing of new products, prototypes, and applications to deliver new high performing advanced materials to our customers. R&D expense accounted for 1% of net sales in both the third quarter of 2026 and 2025. R&D expense accounted for 2% of value-added sales in both the third quarter of 2026 and 2025.

Restructuring expense consists primarily of cost reduction actions taken in order to reduce our fixed cost structure. We recorded a combined total of $0.1 million and $0.2 million of restructuring charges across all segments in the third quarter of 2026 and 2025, respectively. Refer to Note E to the Consolidated Financial Statements for details.

Other-net was $4.2 million of expense in the third quarter of 2026, or a $2.0 million decrease from the third quarter of 2025. Refer to Note F to the Consolidated Financial Statements for details of the major components within Other-net.

Other non-operating (income)-net includes components of pension and post-retirement expense other than service costs. Refer to Note K to the Consolidated Financial Statements for details of the components.

Interest expense-net was $6.6 million and $7.5 million in the third quarter of 2026 and 2025, respectively. The decrease in interest expense is primarily due to a decrease in interest rates and borrowings compared to the prior-year period.

Income tax expense for the third quarter of 2026 was $5.8 million, compared to $2.7 million in the third quarter of 2025. The effective tax rate for the third quarter of 2026 and 2025 was 13.2% and 9.6%, respectively. The effective tax rate for the third quarter of 2026 is lower than the statutory tax rate primarily due to the impact of the foreign-derived deduction eligible income, percentage depletion and foreign tax credit. The effective tax rate for the third quarter of 2025 is lower than the statutory tax rate primarily due to the impact of percentage depletion, the advanced manufacturing production credit, and the foreign derived intangible income deduction. See Note G to the Consolidated Financial Statements for additional discussion.



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Nine Months
Nine Months Ended
October 2,September 26,$%
(Thousands, except per share data)20262025ChangeChange
Net sales$1,731,021 $1,296,796 $434,225 33 %
Value-added sales883,640 792,265 91,375 12 %
Gross margin289,879 244,960 44,919 18 %
Gross margin as a % of net sales17 %19 %
Gross margin as a % of value-added sales33 %31 %
SG&A expense121,047 108,740 12,307 11 %
SG&A expense as a % of net sales7 %8 %
SG&A expense as a % of value-added sales14 %14 %
R&D expense19,224 19,466 (242)(1)%
R&D expense as a % of net sales1 %2 %
R&D expense as a % of value-added sales2 %2 %
Restructuring expense 2,711 2,729 (18)(1)%
Other—net16,605 15,068 1,537 10 %
Operating profit130,292 98,957 31,335 32 %
Other non-operating (income)—net(997)(1,944)947 (49)%
Interest expense—net21,709 22,691 (982)(4)%
Income before income taxes109,580 78,210 31,370 40 %
Income tax expense13,116 9,960 3,156 32 %
Net income$96,464 $68,250 $28,214 41 %
Diluted earnings per share$4.57 $3.27 $1.30 40 %

Net sales of $1,731.0 million in the first nine months of 2026 increased $434.2 million from $1,296.8 million in the first nine months of 2025. The increase was primarily driven by higher sales in the Electronic Materials segment, while also reflecting growth in both Performance Materials and Precision Optics. The increase in the Electronic Materials segment was primarily due to higher precious metal pass through costs, increasing net sales by approximately $284.5 million when compared to the prior-year period. At the Company level, a volume increase in the semiconductor (54%), energy (46%), aerospace and defense (35%), and industrial (17%) end markets were partially offset by a volume decrease in the consumer electronics (12%) end market. Sales to telecommunications and data center applications, which are included within the other end market, increased 88% compared to the prior-year period. Additionally, there was a $4.9 million year over year increase in the volume of raw material beryllium hydroxide sales, also included within the other end market, compared to the same period in the prior-year. See Note C to the Consolidated Financial Statements for additional details on the year over year changes in our net sales by segment and market.
Value-added sales of $883.6 million in the first nine months of 2026 increased $91.4 million, or 12%, compared to the first nine months of 2025. Volume increases in the aerospace and defense (31%), semiconductor (26%), and industrial (11%) end markets were partially offset by a volume decrease in the consumer electronics (21%) end market. Value-added sales to telecommunications and data center applications, which are included within the other end market, increased 42% compared to the prior-year period. Additionally, there was a $4.9 million year over year increase in the volume of raw material beryllium hydroxide sales within the other end market compared to the same period in the prior-year.
Gross margin in the first nine months of 2026 was $289.9 million, an increase of 18% compared to the first nine months of 2025, respectively. Gross margin expressed as a percentage of net sales was 17% and 19% in the first nine months of 2026 and 2025. Gross margin expressed as a percentage of value-added sales increased to 33% in the first nine months of 2026 from 31% in the first nine months of 2025. Gross margin as a percentage of value-added sales increased due to product mix, manufacturing efficiencies and the increase in hydroxide sales, which favorably impacted margins in the first nine months of 2026 compared to the same period in 2025.

SG&A expense was $121.0 million in the first nine months of 2026, compared to $108.7 million in the first nine months of 2025. The increase in SG&A expense was primarily due to timing of incentive compensation accruals due to year to date performance. Expressed as a percentage of net sales, SG&A expense was 7%, and 8% in the first nine months of 2026 and


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2025, respectively. Expressed as a percentage of value-added sales, SG&A expense was 14% in both the first nine months of 2026 and 2025.

R&D expense consists primarily of direct personnel and material costs for product innovation including pre-production development, evaluation, and testing of new products, prototypes, and applications to deliver new high performing advanced materials to our customers. R&D expense accounted for 1% and 2% of net sales in the first nine months of 2026 and 2025, respectively. R&D expense accounted for 2% of value-added sales in both the first nine months of 2026 and 2025.

Restructuring (income) expense consists primarily of cost reduction actions taken in order to reduce our fixed cost structure. In the first nine months of both 2026 and 2025, we recorded a combined total of $2.7 million of restructuring charges across all segments. Refer to Note E to the Consolidated Financial Statements for details.

Other-net was $16.6 million of expense in the first nine months of 2026, or a $1.5 million increase from the first nine months of 2025. Refer to Note F to the Consolidated Financial Statements for details of the major components within Other-net.

Other non-operating (income)-net includes components of pension and post-retirement expense other than service costs. Refer to Note K to the Consolidated Financial Statements for details of the components.

Interest expense-net was $21.7 million and $22.7 million in the first nine months of 2026 and 2025, respectively. The decrease in interest expense is primarily due to an decrease in interest rates and borrowings compared to the prior-year period.

Income tax expense for the first nine months of 2026 was $13.1 million, compared to $10.0 million in the nine months of 2025. The Company's effective tax rate for the first nine months of 2026 and 2025 was 12.0% and 12.7%, respectively. The effective tax rate for the first nine months of 2026 includes a net discrete income tax benefit of $6.8 million, primarily consisting of excess tax benefits from stock-based compensation awards, release of a valuation allowance previously recorded against the deferred tax assets of one of the Company’s foreign subsidiaries, and prior-year return-to-provision adjustments. The effective tax rate for the first nine months of 2025 includes a net discrete income tax benefit of $0.7 million, primarily consisting of prior-year return-to-provision adjustments recorded. See Note G to the Consolidated Financial Statements for additional discussion.
































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Value-Added Sales - Reconciliation of Non-GAAP Financial Measure
A reconciliation of net sales to value-added sales, a non-GAAP financial measure, for each reportable segment and for the total Company for the third quarter and first nine months of 2026 and 2025 is as follows:
Third Quarter EndedNine Months Ended
October 2,September 26,October 2,September 26,
(Thousands)2026202520262025
Net sales
Performance Materials$198,978 $170,787 $562,592 $527,552 
Electronic Materials336,608 246,837 1,075,154 696,059 
Precision Optics31,704 27,184 93,275 73,185 
Other— — — — 
Total$567,290 $444,808 $1,731,021 $1,296,796 
Less: pass-through metal costs
Performance Materials$20,317 $13,681 $54,446 $41,889 
Electronic Materials233,167 167,137 792,699 462,497 
Precision Optics144 41 236 145 
Other— — — — 
Total$253,628 $180,859 $847,381 $504,531 
Value-added sales
Performance Materials$178,661 $157,106 $508,146 $485,663 
Electronic Materials103,441 79,700 282,455 233,562 
Precision Optics31,560 27,143 93,039 73,040 
Other— — — — 
Total$313,662 $263,949 $883,640 $792,265 

Internally, management reviews net sales on a value-added basis. Value-added sales is a non-GAAP financial measure that deducts the value of the pass-through metal costs from net sales. Value-added sales allow management to assess the impact of differences in net sales between periods, segments, or markets, and analyze the resulting margins and profitability without the distortion of movements in pass-through metal costs. The dollar amount of gross margin and operating profit is not affected by the value-added sales calculation. We sell other metals and materials that are not considered direct pass-throughs, and these costs are not deducted from net sales when calculating value-added sales. Non-GAAP financial measures, such as value-added sales, have inherent limitations and should not be considered in isolation, or as a substitute for analyses of results as reported under GAAP.
The cost of gold, silver, platinum, palladium, copper, ruthenium, iridium, rhodium, rhenium, and osmium can be quite volatile. Our pricing policy is to directly pass the cost of these metals on to the customer in order to mitigate the impact of metal price volatility on our results from operations. Trends and comparisons of net sales are affected by movements in the market prices of these metals, but changes in net sales due to metal price movements may not have a proportionate impact on our profitability.
Our net sales are also affected by changes in the use of customer-supplied metal. When we manufacture a precious metal product, the customer may purchase metal from us or may elect to provide its own metal, in which case we process the metal on a toll basis and the metal value does not flow through net sales or cost of sales. In either case, we generally earn our margin based upon our fabrication efforts. The relationship of this margin to net sales can change depending upon whether or not the product was made from our metal or the customer’s metal. The use of value-added sales removes the potential distortion in the comparison of net sales caused by changes in the level of customer-supplied metal.


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By presenting information on net sales and value-added sales, it is our intention to allow users of our financial statements to review our net sales with and without the impact of the pass-through metals.
Segment Results
The Company consists of four reportable segments: Performance Materials, Electronic Materials, Precision Optics, and Other. The Other reportable segment includes unallocated corporate costs.

Performance Materials
Third Quarter
Third Quarter Ended
October 2,September 26,$%
(Thousands)20262025ChangeChange
Net sales$198,978 $170,787 $28,191 17 %
Value-added sales178,661 157,106 21,555 14 %
EBITDA42,508 36,911 5,597 15 %
Net sales from the Performance Materials segment of $199.0 million in the third quarter of 2026 increased 17% compared to net sales of $170.8 million in the third quarter of 2025. The increase in sales was due to higher sales volumes in the aerospace and defense (49%) end market. Sales to telecommunications and data center applications, included within the other end market, increased 76% compared to the prior-year period. This increase was partially offset by a $3.8 million year over year decrease in the volume of raw material beryllium hydroxide sales, also included within the other end market.
Value-added sales of $178.7 million in the third quarter of 2026 were 14% higher than value-added sales of $157.1 million in the third quarter of 2025. The increase in value-added sales was due to the same factors driving the increase in net sales.
EBITDA for the Performance Materials segment was $42.5 million in the third quarter of 2026, compared to $36.9 million in the third quarter of 2025. The increase was primarily driven by incremental margin from higher sales volume and price, partially offset by mix.
Nine Months
Nine Months Ended
October 2,September 26,$%
(Thousands)20262025ChangeChange
Net sales$562,592 $527,552 $35,040 7 %
Value-added sales508,146 485,663 22,483 5 %
EBITDA114,611 118,678 (4,067)(3)%
Net sales from the Performance Materials segment of $562.6 million in the first nine months of 2026 increased 7% compared to net sales of $527.6 million in the first nine months of 2025. The increase in sales was due to higher sales volumes in the aerospace and defense (21%) end market. Sales to telecommunications and data center applications, which are included within the other end market, increased 47% compared to the prior-year period. Additionally, there was a $4.9 million year over year increase in the volume of raw material beryllium hydroxide sales in the other end market compared to the first nine months of 2025. This was partially offset by lower sales volumes in the consumer electronics (22%) end market. The decrease in the consumer electronics end market over the first nine months primarily reflects lower volumes resulting from a controlled production ramp during the first half of 2026 as part of ongoing operational alignment with a large precision clad strip customer. During the third quarter, production and shipment levels returned to normal, reflecting stabilization of operations and improved demand fulfillment.
Value-added sales of $508.1 million in the first nine months of 2026 were 5% higher than value-added sales of $485.7 million in the first nine months of 2025. The increase in value-added sales was due to the same factors driving the increase in net sales.

EBITDA for the Performance Materials segment was $114.6 million in the first nine months of 2026 compared to $118.7 million in the first nine months of 2025. The decrease was primarily driven by incremental charges incurred in the first half of 2026 related to operational stabilization efforts, and higher overall costs for a large precision clad strip customer.



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Electronic Materials
Third Quarter
Third Quarter Ended
October 2,September 26,$%
(Thousands)20262025ChangeChange
Net sales$336,608 $246,837 $89,771 36 %
Value-added sales103,441 79,700 23,741 30 %
EBITDA33,136 20,925 12,211 58 %
Net sales from the Electronic Materials segment of $336.6 million in the third quarter of 2026 were 36% higher than net sales of $246.8 million in the third quarter of 2025. The increase in net sales was due to higher pass-through metal pricing and sales volumes in the semiconductor end market. Higher pass-through metal pricing contributed $57.3 million compared to the third quarter of 2025.
Value-added sales of $103.4 million in the third quarter of 2026 increased 30% compared to value-added sales of $79.7 million in the third quarter of 2025. The increase in value-added sales was primarily driven by a volume increase in the semiconductor (37%) end market.
EBITDA for the Electronic Materials segment was $33.1 million in the third quarter of 2026 compared to $20.9 million in the third quarter of 2025. EBITDA in the third quarter of 2026 benefited from incremental margin driven by higher sales volumes and strong price/mix.

Nine Months
Nine Months Ended
October 2,September 26,$%
(Thousands)20262025ChangeChange
Net sales$1,075,154 $696,059 $379,095 54 %
Value-added sales282,455 233,562 48,893 21 %
EBITDA86,497 49,604 36,893 74 %
Net sales from the Electronic Materials segment of $1,075.2 million in the first nine months of 2026 were 54% higher than net sales of $696.1 million in the first nine months of 2025. The increase in net sales was due to higher pass-through metal pricing and sales volumes in the semiconductor and energy end markets. Higher pass-through metal pricing contributed $284.5 million compared to the first nine months of 2025.
Value-added sales of $282.5 million in the first nine months of 2026 increased 21% compared to value-added sales of $233.6 million in the first nine months of 2025. The increase in value-added sales was primarily driven by volume increases in the semiconductor (25%) end market.
EBITDA for the Electronic Materials segment was $86.5 million in the first nine months of 2026 compared to $49.6 million in the first nine months of 2025. EBITDA in the first nine months of 2026 benefited from incremental margin driven by higher sales volumes, and strong price/mix, as well as favorable operational and manufacturing efficiencies.




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Precision Optics
Third Quarter
(Thousands)Third Quarter Ended
October 2,September 26,$%
20262025ChangeChange
Net sales$31,704 $27,184 $4,520 17 %
Value-added sales31,560 27,143 4,417 16 %
EBITDA5,473 3,231 2,242 69 %
Net sales from the Precision Optics segment of $31.7 million in the third quarter of 2026 increased 17% compared to net sales of $27.2 million in the third quarter of 2025. The increase was primarily due to higher sales volumes in the semiconductor (155%), aerospace and defense (18%) and industrial (13%) end markets.
Value-added sales of $31.6 million in the third quarter of 2026 increased 16% compared to value-added sales of $27.1 million in the third quarter of 2025. The increase in value-added sales was due to the same factors driving the increase in net sales.
EBITDA for the Precision Optics segment was $5.5 million in the third quarter of 2026 compared to $3.2 million in the third quarter of 2025. The increase in EBITDA was primarily driven by favorable impacts of higher volume, strong price/mix and manufacturing efficiencies.

Nine Months
(Thousands)Nine Months Ended
October 2,September 26,$%
20262025ChangeChange
Net sales$93,275 $73,185 $20,090 27 %
Value-added sales93,039 73,040 19,999 27 %
EBITDA16,750 3,848 12,902 335 %
Net sales from the Precision Optics segment of $93.3 million in the first nine months of 2026 increased 27% compared to net sales of $73.2 million in the first nine months of 2025. The increase was primarily due to higher sales volumes in the semiconductor (163%), aerospace and defense (35%), and industrial (23%) end markets.
Value-added sales of $93.0 million in the first nine months of 2026 increased 27% compared to value-added sales of $73.0 million in the first nine months of 2025. The increase in value-added sales was due to the same factors driving the increase in net sales.
EBITDA for the Precision Optics segment was $16.8 million in the first nine months of 2026 compared to $3.8 million in the first nine months of 2025. The increase in EBITDA was primarily driven by favorable impacts of higher volume, strong price/mix and manufacturing efficiencies.

Other
Third Quarter
(Thousands)Third Quarter Ended
October 2,September 26,$%
20262025ChangeChange
Net sales$— $— $— — %
Value-added sales— — — — %
EBITDA(10,621)(7,909)(2,712)34 %
The Other reportable segment in total includes unallocated corporate costs.
Corporate costs were $10.6 million in the third quarter of 2026 compared to $7.9 million in the third quarter of 2025. Corporate costs were 2% of Company-wide net sales in both the third quarter of 2026 and 2025. Corporate costs were 3% of Company-wide value-added sales in both the third quarter of 2026 and 2025. The increase in corporate costs was primarily due to higher stock compensation and incentive compensation expense due to strong Company performance.



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Nine Months
(Thousands)Nine Months Ended
October 2,September 26,$%
20262025ChangeChange
Net sales$— $— $— — %
Value-added sales— — — — %
EBITDA(29,236)(19,678)(9,558)49 %
Corporate costs were $29.2 million in the first nine months of 2026 compared to $19.7 million in the first nine months of 2025. Corporate costs were 2% of Company-wide net sales in both the first nine months of 2026 and 2025. Corporate costs were 3% and 2% of Company-wide value-added sales in the first nine months of 2026 and 2025, respectively. The increase in corporate costs was primarily due to higher stock compensation and incentive compensation expense due to strong Company performance.


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FINANCIAL POSITION
Cash Flow
A summary of cash flows provided by (used in) operating, investing, and financing activities is as follows: 
Nine Months Ended
October 2,September 26,$
(Thousands)20262025Change
Net cash provided by operating activities$142,693 $83,724 $58,969 
Net cash (used in) investing activities(57,882)(77,261)19,379 
Net cash (used in) financing activities(82,870)(8,417)(74,453)
Effects of exchange rate changes(218)1,652 (1,870)
Net change in cash and cash equivalents$1,723 $(302)$2,025 
Net cash provided by operating activities totaled $142.7 million in the first nine months of 2026 versus $83.7 million in the prior-year period. In addition to the $31.3 million increase in operating income, the increase in cash provided by operating activities was favorably impacted by the Company’s continued working capital initiatives, specifically efforts focused around timing of quarter-end payments related to payables and accruals. This resulted in incremental cash flow of $38.4 million, when comparing to the first nine months of 2025. Additionally, prepaids and other current assets decreased $0.4 million in the first nine months of 2026, compared to an increase of $21.1 million in the first nine months of 2025, generating $19.8 million in operating cash flow. This was primarily due to a $3.3 million decrease in unbilled receivables in the first nine months of 2026, compared to a $14.9 million increase in the prior-year period. These cash inflows were partially offset by an increase in accounts receivable of $46.7 million to support sales growth in the first nine months of 2026, compared to a decrease of $1.7 million in the first nine months of 2025, resulting in a cash outflow of $48.5 million. The remaining cash inflow was driven by a $9.3 million increase in unearned income compared to the prior nine month period, in addition to various other favorable working capital activity.
Net cash used in investing activities was $57.9 million in the first nine months of 2026 compared to $77.3 million in the comparable prior-year period. The decrease in cash used in investing activities is due to the business acquisition in 2025, and a decrease in mine development costs, offset by higher capital expenditures. Capital expenditures are made primarily for new product development, replacing and upgrading equipment, infrastructure investments, and implementing information technology initiatives. For the full year 2026, the Company expects payments for property, plant, and equipment to be approximately $75 million.
Net cash used in financing activities totaled $82.9 million in the first nine months of 2026 and compared to $8.4 million in the comparable prior-year period. The net financing cash outflow in the first nine months of 2026 was primarily driven by debt repayments, made possible by increased cash levels resulting from the Company's ongoing working capital initiatives.
Liquidity
We believe cash flow from operations plus the available borrowing capacity and our current cash balance are adequate to support operating requirements, capital expenditures, projected pension plan contributions, the current dividend program, environmental remediation projects, and strategic acquisitions for at least the next twelve months and for the foreseeable future thereafter. At October 2, 2026, cash and cash equivalents held by our foreign operations totaled $14.3 million. We do not expect restrictions on repatriation of cash held outside of the United States to have a material effect on our overall liquidity, financial condition, or results of operations for the foreseeable future.
A summary of key data relative to our liquidity, including outstanding debt, cash, and available borrowing capacity, as of October 2, 2026 and December 31, 2025 is as follows:


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October 2,December 31,
(Thousands)20262025
Cash and cash equivalents$15,404 $13,681 
Total outstanding debt397,049 458,793 
Net debt$(381,645)$(445,112)
Available borrowing capacity$275,682 $223,675 
Net debt is a non-GAAP financial measure. We are providing this information because we believe it is more indicative of our overall financial position. It is also a measure our management uses to assess financing and other decisions. We believe that based on our typical cash flow generated from operations, we can support a higher leverage ratio in future periods.
The available borrowing capacity in the table above represents the additional amounts that could be borrowed under our revolving credit facility and other secured lines existing as of the end of each period depicted. The applicable debt covenants have been taken into account when determining the available borrowing capacity, including the covenant that restricts borrowing capacity to a multiple of the twelve-month trailing earnings before interest, income taxes, depreciation and amortization, and other adjustments.
In June 2025, the Company entered into a Fifth Amended and Restated Credit Agreement (Credit Agreement). Among other things, the Credit Agreement provides for a $450 million senior secured revolving credit facility (Revolving Credit Facility) and a $225 million senior secured term loan facility (Term Loan Facility and, together with the Revolving Credit Facility, Credit Facilities). The Term Loan Facility was fully drawn on June 26, 2025. The Credit Facilities mature on June 26, 2030.
The Credit Agreement also provides for an uncommitted incremental facility whereby, subject to the satisfaction of certain conditions, the Company may be able to borrow additional term loans in an aggregate amount not to exceed $250 million. The Credit Agreement provides the Company and its subsidiaries with additional capacity to enter into facilities for the consignment of precious metals, copper, nickel and tantalum, and provides enhanced flexibility to finance acquisitions and other strategic initiatives. Borrowings under the Credit Agreement are secured by substantially all of the assets of the Company and its direct subsidiaries, with the exception of non-mining real property, precious metal and certain other assets.
The Credit Agreement allows the Company to borrow money at a premium over SOFR or prime rate and at varying maturities. The premium resets quarterly according to the terms and conditions stipulated in the credit agreement. The Credit Agreement includes restrictive covenants relating to restrictions on additional indebtedness, acquisitions, dividends, and stock repurchases. In addition, the Credit Agreement includes covenants that limit the Company to a maximum leverage ratio and a minimum interest coverage ratio. We were in compliance with all of our debt covenants as of October 2, 2026 and December 31, 2025. Cash on hand up to $35.0 million can benefit the covenants and may benefit the borrowing capacity under the Credit Agreement.
Portions of our business utilize off-balance sheet consignment arrangements allowing us to use metal owned by precious metal consignors as we manufacture product for our customers. Metal is purchased from the precious metal consignor and sold to our customer at the time of product shipment. Expansion of business volumes and/or higher metal prices can put pressure on the consignment line limitations from time to time. In August 2025, we entered into a precious metals consignment agreement, maturing on August 31, 2028, which replaced the consignment agreements that would have matured on August 31, 2025. The available and unused capacity under the metal consignment agreements expiring in August 2028 totaled approximately $260.1 million as of October 2, 2026, compared to $173.8 million as of December 31, 2025.
In January 2014, our Board of Directors approved a plan to repurchase up to $50.0 million of our common stock. We repurchased 100,000 shares under this program in the second quarter of 2025 for a total cost of $7.8 million. Since the approval of the repurchase plan, we have purchased 1,354,264 shares at a total cost of $49.5 million. In October 2025, we announced that our Board of Directors had approved a new plan to repurchase up to $50.0 million of our common stock, replacing the plan approved in 2014. The timing of the share repurchases will depend on several factors, including market and business conditions, our cash flow, debt levels, and other investment opportunities. There is no minimum quantity requirement to repurchase our common stock for a given year, and the repurchases may be discontinued at any time.
We paid cash dividends of $3.0 million and $9.0 million on our common stock in the third quarter and first nine months of 2026, respectively. We intend to pay a quarterly dividend on an ongoing basis, subject to a determination that the dividend remains in the best interest of our shareholders.


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OFF-BALANCE SHEET ARRANGEMENTS AND CASH OBLIGATIONS
We maintain the majority of the precious metals and portions of the copper and nickel we use in production on a consignment basis in order to reduce our exposure to metal price movements and to reduce our working capital investment. The notional value of off-balance sheet precious metals and copper and nickel was $589.9 million and $526.2 million as of October 2, 2026 and December 31, 2025, respectively. We were in compliance with all of the covenants contained in the consignment agreements as of October 2, 2026. For additional information on our material cash obligations, refer to our 2025 Annual Report on Form 10-K.

CRITICAL ACCOUNTING POLICIES
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires the inherent use of estimates and management’s judgment in establishing those estimates. For additional information regarding critical accounting policies, please refer to our 2025 Annual Report on Form 10-K.

Forward-looking Statements: Portions of the narrative set forth in this document that are not statements of historical or current facts are forward-looking statements. Our actual future performance may materially differ from that contemplated by the forward-looking statements as a result of a variety of factors. These factors include, in addition to those mentioned elsewhere herein: the global economy, including inflationary pressures, potential future recessionary conditions and the impact of tariffs and trade agreements; the impact of any U.S. Federal Government shutdowns or sequestrations; the condition of the markets which we serve, whether defined geographically or by segment; changes in product mix and the financial condition of customers; our success in developing and introducing new products and new product ramp-up rates; our success in passing through the costs of raw materials to customers or otherwise mitigating fluctuating prices for those materials, including the impact of fluctuating prices on inventory values; our success in identifying acquisition candidates and in acquiring and integrating such businesses; the impact of the results of acquisitions on our ability to fully achieve the strategic and financial objectives related to these acquisitions; our success in implementing our strategic plans and the timely and successful start-up and completion of any capital projects; other financial and economic factors, including the cost and availability of raw materials (both base and precious metals), physical inventory valuations, metal consignment fees, tax rates, exchange rates, interest rates, pension costs and required cash contributions and other employee benefit costs, energy costs, regulatory compliance costs, the cost and availability of insurance, credit availability, and the impact of the Company’s stock price on the cost of incentive compensation plans; the uncertainties related to the impact of war, terrorist activities, and acts of God; changes in government regulatory requirements and the enactment of new legislation that impacts our obligations and operations; the conclusion of pending litigation matters in accordance with our expectation that there will be no material adverse effects; the disruptions in operations from, and other effects of, catastrophic and other extraordinary events including geopolitical conflicts such as the conflict between Russia and Ukraine and the conflict between the United States and Iran; realization of financial benefits expected from the Inflation Reduction Act of 2022; and the risk factors set forth in Part 1, Item 1A of the Company's 2025 Annual Report on Form 10-K.
Item 3.Quantitative and Qualitative Disclosures about Market Risk
For information regarding market risks, refer to Item 7A. Quantitative and Qualitative Disclosures About Market Risk in our 2025 Annual Report on Form 10-K. There have been no material changes in our market risks since the inclusion of this discussion in our 2025 Annual Report on Form 10-K.


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Item 4.Controls and Procedures
a)Evaluation of Disclosure Controls and Procedures
The Company carried out an evaluation under the supervision and with participation of the Company's management, including the chief executive officer and chief financial officer, of the effectiveness of the design and operation of disclosure controls and procedures as of October 2, 2026 pursuant to Rule 13a-15(b) and 15d-15(b) under the Securities Exchange Act of 1934, as amended (Exchange Act). Based on that evaluation, management, including the chief executive officer and chief financial officer, concluded that disclosure controls and procedures are effective as of October 2, 2026.
b)Changes in Internal Control over Financial Reporting

There have been no changes in the Company's internal control over financial reporting that occurred during the quarter ended October 2, 2026 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.



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PART II OTHER INFORMATION
Item 1.Legal Proceedings

Our subsidiaries and our holding company are subject, from time to time, to a variety of civil and administrative proceedings arising out of our normal operations, including, without limitation, product liability claims, health, safety, and environmental claims, and employment-related actions.
The information presented in the Legal Proceedings section of Note P ("Contingencies") of the Notes to Consolidated Financial Statements (Unaudited) is incorporated herein by reference.

Item 2.Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities
The following table presents information with respect to repurchases of common stock made by the Company during the three months ended October 2, 2026.
PeriodTotal Number of Shares PurchasedAverage Price Paid per ShareTotal Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (1)
July 4 through August 7, 2026— $— — $50,000,000 
August 8 through September 4, 2026— — — 50,000,000 
September 5 through October 2, 2026— — — 50,000,000 
Total— $— — $50,000,000 


(1)On October 29, 2025, the Company announced its Board of Directors had authorized the repurchase of up to $50.0 million of its common stock. During the three months ended October 2, 2026, the Company did not repurchase any shares under this authorization.
Item 4.Mine Safety Disclosures
Information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K (17 CFR 229.104) is included in Exhibit 95 to this quarterly report on Form 10-Q.


42

Item 5.Other Information

During the quarter ended October 2, 2026, no director or officer (as defined in Rule 16a-1(f) under the Exchange Act) of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement” (as each term is defined in Item 408 of Regulation S-K).



Item 6.Exhibits
All documents referenced below were filed pursuant to the Exchange Act by Materion Corporation, file number 001-15885, unless otherwise noted.
31.1
Certification of Chief Executive Officer required by Rule 13a-14(a) or 15d-14(a)*
31.2
Certification of Chief Financial Officer required by Rule 13a-14(a) or 15d-14(a)*
32
Certifications of Chief Executive Officer and Chief Financial Officer required by 18 U.S.C. Section 1350*
95
Mine Safety Disclosure Pursuant to Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act for the period ended October 2, 2026*
101.INSXBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document*
101.SCHInline XBRL Taxonomy Extension Schema Document*
101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document*
101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document*
101.LABInline XBRL Taxonomy Extension Label Linkbase Document*
101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document*
104Cover Page Interactive Data File (formatted as Inline XBRL and contained in the Exhibit 101 attachments)
*Submitted electronically herewith.


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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
MATERION CORPORATION
Dated: November 4, 2026
/s/ Shelly M. Chadwick
Shelly M. Chadwick
Vice President, Finance and Chief Financial Officer
(Principal Financial Officer)


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